Nonprofit’s Lawsuit Over Federal Funding Freeze Is Part of ‘Avalanche’ of Litigation

NEW YORK (AP) — A new coalition of nonprofits came together overnight to challenge a seemingly sweeping order from the Trump administration last week pausing trillions of dollars in federal funding. They succeeded in blocking that order, at least for now.

It’s the start of what nonprofits expect will be a deluge of court actions, as civil litigation promises to be a powerful tool civil society groups plan to use to push back on President Donald Trump’s policies.

“There will be an avalanche of litigation to stop unlawful activity,” said Skye Perryman, the president and CEO of Democracy Forward, which brought the nonprofit coalition’s suit against the federal funding freeze. A judge ruled Monday to allow their lawsuit, one of many filed in the first weeks of the new administration, to move forward and extended a temporary restraining order.

More than a dozen federal lawsuits have already been filed against President Trump and his administration by a wide range of nonprofits, from several Quaker organizations to the consumer rights group Public Citizen to New Hampshire Indonesian Community Support.

Many considered policy changes under the new administration, but few contemplated the total suspension of foreign aid or a widespread pause of federal funding. The federal funding freeze was a moment widely viewed by the nonprofit sector as an existential crisis. And organizations took a range of approaches from keeping their heads down, to organizing community forums, to firing up supporters to contact Congress.

Diane Yentel, the president and CEO the National Council of Nonprofits, moved quickly to take action. She had already been tracking the impact of President Donald Trump’s initial executive orders on nonprofits when she saw the memo in the evening on Jan. 27.

The Office of Management and Budget order said: “Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.”

Posting to LinkedIn that night, Yentel wrote, the OMB memo was, “a potential 5-alarm fire for nonprofits and the people and communities they serve,” adding, “We won’t stand by and let it happen.”

Within hours, the National Council of Nonprofits, Democracy Forward, and several other groups joined forces and hammered out a legal strategy.

“We worked throughout the night to pull it all together and be able by 9 a.m. for the attorneys to call the judge in the district court and let them know that there would be a challenge to this order and that we would need to have an emergency hearing that day,” Yentel said in an interview with The Associated Press.

Tom Watson, president and founder of philanthropic consulting firm CauseWired, was pleased to see the collective action led by the National Council of Nonprofits, along with several other groups including the American Public Health Association, Main Street Alliance, which supports small businesses, and SAGE, which serves LGBTQ+ adults.

“I don’t think this is a short thunderstorm that we can just ride out and then, everything will be back to normal,” Watson said. “I think it’s more of a massive tidal wave,” that threatens to sweep away the whole ecosystem.

Nonprofits and their funders can draw on experiences from the first Trump administration and the COVID-19 pandemic — which created similar upheaval. But many see the federal funding freeze as unprecedented.

Ann Oliva, CEO of the National Alliance to End Homelessness, said access to some of the platforms where nonprofit organizations receive funding was cut off even before the deadline the Trump administration set in its memo, increasing the sense of confusion and panic.

Her organization called on people to contact their representatives in Congress to provide them information about the consequences of this potential funding freeze. At least 10,000 people used their electronic contact form to reach members of Congress, NAEH reported last week.

Grace Bonilla, president of The United Way of New York City, which receives state and local government funding to support food pantries at hundreds of small organizations in New York City, said those organizations are already impacted not just by concerns about funding freezes, but by the administration’s other policies, like increased immigration enforcement, for example.

“It’s week three,” she said, referring to the start of the Trump administration. Bonilla said she’s been constantly talking with other nonprofit leaders, funders and corporations about how they should respond. For now, many are just waiting to see what happens next, she said.

“People are painfully aware about what this means, not just to their bottom line budget, but what it means in the cost of people, the number of people that are going to be hurt by any of these things actually coming to fruition,” she said.

Bonilla said it’s hard for leaders of nonprofits and others in the private sector to say, “This is the thing that we’re going to stand behind,” because they don’t know what will come next.

“I would say that our elected officials need to be braver,” she added.

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Associated Press coverage of philanthropy and nonprofits receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content.